Nigeria Discloses plans to Harvest Unclaimed Balances, Dividends and Funds in Dormant Accounts

The Central Bank of Nigeria (CBN) has announced its plan to harvest funds from unclaimed balances, dividends and dormant accounts, potentially putting them in Nigerian Treasury Bills (NTBs) and other government securities.

This announcement comes as part of the newly released “Guidelines on Management of Dormant Accounts, Unclaimed Balances, and Other Financial Assets in Banks and Other Financial Institutions in Nigeria,” which aims to standardize the handling of dormant accounts and unclaimed financial assets.

The revised guidelines operationalize Section 72 of the Banks and Other Financial Institutions Act (BOFIA) 2020. These guidelines were formulated following extensive engagement and consultation with relevant stakeholders, whose feedback and recommendations were incorporated into the final document. The guidelines provide a structured approach for the administration of dormant accounts, unclaimed balances, and other financial assets, ensuring transparency and consistency in their management.

According to the guidelines, the CBN will establish a dedicated account called the “Unclaimed Balances Trust Fund (UBTF) Pool Account” to manage these funds. The guidelines mandate that both the principal and any accrued interest from these investments must be refunded to beneficiaries within ten working days of receiving a request.

The guideline document specifies:

1. The CBN shall open and maintain the ‘UBTF Pool Account’.
   It shall maintain records of the beneficiaries of the unclaimed balances stored in the UBTF Pool Account.
2. The funds will be invested in Nigerian Treasury Bills (NTBs) and other securities as approved by the ‘Unclaimed Balances Management Committee’.
3. The principal and interest (if any) on the invested funds will be refunded to the beneficiaries within ten working days of receiving a request.
4. If an extension of the timeline is necessary, a notice of extension, including reasons, shall be communicated to the requesting financial institution (FI).

Eligible Accounts and Exemptions

The guidelines define eligible accounts as those that have remained dormant for ten years or more, encompassing various account types such as current, savings, term deposits, domiciliary accounts, and prepaid card accounts. Other financial assets eligible under these guidelines include proceeds from unclaimed financial instruments, unclaimed salaries, wages, and bonuses.

However, certain accounts are exempt from these provisions. Accounts that are subject to litigation, under investigation by regulatory authorities or law enforcement agencies, or encumbered accounts (such as those with liens or used as collateral) are not included in the guidelines.

CBN’s Responsibilities

The CBN is charged with maintaining the UBTF Pool Account, overseeing the management committee, and ensuring adherence to the guidelines. The bank will publish the list of owners of unclaimed balances and the procedures for reclaiming these funds on its website.

Additionally, the CBN will issue an annual notice in three national daily newspapers, inviting the public to review details of outstanding unclaimed balances under its custody.

Financial institutions are mandated to monitor inactive accounts, notify customers of inactivity, and protect these accounts from unauthorized usage. They must also publish details of dormant accounts and transfer eligible unclaimed balances to the CBN’s UBTF Pool Account quarterly. Furthermore, financial institutions are required to maintain records and publish notices regarding the process of reclaiming unclaimed balances.

In instances where financial institutions are liquidated, the Nigeria Deposit Insurance Corporation (NDIC) will assume the role of the financial institution. The NDIC’s involvement ensures that unclaimed balances in liquidated institutions are managed and transferred in accordance with the guidelines, safeguarding the interests of the account owners and ensuring compliance with regulatory standards.

Account owners are also tasked with responsibilities. They must inform financial institutions of any changes in their personal information and submit applications for reclaiming their funds. Proper proof of ownership must be provided, and the procedures outlined in the guidelines must be followed.

These measures aim to enhance transparency and ensure that unclaimed balances are adequately managed and returned to their rightful owners.

In the new guidelines, the CBN stated that the modalities for the transfer of the relevant balances, funds, and assets to the CBN, along with the revised templates for the quarterly returns to the Banking Supervision Department or Other Financial Institutions Supervision Department (as applicable), will be communicated subsequently.